Western Digital Reports First-Quarter Revenue Below Estimates Due to Weak Demand for Data Storage Products, According to Reuters

Western Digital Corp has projected its first-quarter revenue to fall below Wall Street’s expectations, indicating a slower recovery in the data storage sector. The company anticipates first-quarter revenue between $4 billion and $4.20 billion, while analysts had estimated around $4.22 billion.

Despite the ongoing boom in artificial intelligence lifting certain memory chip manufacturers, the demand for chips essential for traditional data centers continues to decline, adversely affecting companies like Western Digital. Following this announcement, the company’s shares dropped 4.2% in after-hours trading.

Western Digital expects adjusted earnings per share to be in the range of $1.55 to $1.85, compared to analyst expectations of $1.74. In the fourth quarter, the company reported revenues of $3.76 billion, which slightly surpassed analysts’ average forecast of $3.74 billion. However, the adjusted profit per share for that quarter was 88 cents, falling short of the expected $1.17.

In positive news, the company’s flash memory division, which is set to operate independently from the traditional hard disk drive unit by the second half of 2024, saw a significant revenue increase of nearly 28%, reaching $1.76 billion. In contrast, competitor Seagate Technology recently provided a positive revenue forecast for its first quarter, citing rising demand for memory chips from personal computing and data center clients.